CONFIDENTIAL 1 AC/FEB 2023/FAR110

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE : FINANCIAL ACCOUNTING 1

COURSE CODE : FAR110
EXAMINATION : FEBRUARY 2023
TIME : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of six (6) questions.

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Do not bring any material into the examination room unless permission is given by the
invigilator.

4. Please check to make sure that this examination pack consists of:

i. the Question Paper

ii. an Answer Booklet – provided by the Faculty

5. Answer ALL questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 8 printed pages
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QUESTION 1

a. The definition of accounting demonstrates that the accounting system can be

categorised into three basic activities.

Required:

Identify THREE (3) basic activities of an accounting system.

(3 marks)

b. A company is a business entity incorporated under the Malaysian Companies Act 2016.
The ownership interest of the company is divided into units of shares that are
transferable. A company can be a private limited or a public limited company.

Required:

Identify THREE (3) characteristics of public listed company.

(3 marks)

c. You are planning to set up a small business and you are very concern on the necessity
to keep proper accounting records. You know that a business must identifies its
economic events and record those events in order to provide a history of the business
financial activities. The records must be kept in a systematic and chronological diary of
events and it must be measurable in ringgit and cents. The business must classify and
summarize its economic events to enable it to prepare for the financial statements to be
used accordingly by the users of the accounting information.

Required:

Describe FOUR (4) purposes of preparing the financial statement.

(4 marks)

d. Users of accounting information are categorised as internal users and external users.

Required:

i. Describe TWO (2) differences between these two types of users.

(2 marks)

ii. Briefly explain THREE (3) external users who have indirect interest on the
accounting information of an entity.
(3 marks)
Total: 15 marks)

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QUESTION 2

A. Aleeza runs an ethnic beads accessories and jewelry in Penang since 2015. The
business uses the periodic system to record the inventory. The opening balances for
Aleeza’s business book on 31 December 2021 are provided below:

Cash in hand RM13,000

Cash at bank RM26,300
Motor Vehicle RM65,000

The following transactions are for the month of January 2022.

January
Transactions
2022
3 Borrowed RM25,000 from Opulent Bank.
4 Purchased beaded necklace amounting RM10,000 from Beadzone
Enterprise on credit, with the terms 5/15 net 30.
5 The business returned some beaded necklace to Beadzone Enterprise
due to wrong colour. A credit note amounting RM800 was issued to the
business.
12 The business granted a credit sale to Penang Women Association
amounting to RM2,000 with the terms 3/10 net 15.
14 The business paid the amount owing to Beadzone Enterprise by cheque.
15 The business issued a credit note to Penang Women Association
amounting RM300 for wrong description of goods.
20 The Penang Women Association settled the amount owed to the business
by cash.
25 Aleeza took out a beaded bracelet amounting RM280 for her sister’s
engagement gift.
28 Received a cheque from Jane for sales worth RM1,800.
30 Paid electricity expenses amounting RM700 by cash.

Required:

a. Explain the main function of purchase return journal and sales return journal.
(2 marks)

b. Journalize the above transactions in the appropriate special journals. Narration is

not required.
(8 marks)

B. The accounts of Eyani Enterprise was prepared by a newly appointed accounts clerk,
Tasha. The following transactions were recorded by Tasha:

1. Tasha forgot to record a cheque payment for motor vehicle maintenance

amounting RM600.

2. The business purchased goods amounting RM4,600 on credit from Syahidah

Enterprise. Tasha debited purchase account RM4,600 and credited Shahidah
Enterprise with the same amount.
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3. The business had paid RM800 utilities expense. Tasha had debited the bank
account with RM800 and credited the utilities expense with the same amount.

Required:

a. Identify the type of errors made by the accounts clerk in recording each of the
above transactions.
(3 marks)

b. Prepare the correcting entry of the above error either in the ledger or journal.
Narration is not required.
(5 marks)
(Total: 18 marks)

QUESTION 3

A. The petty cash book of Juju Enterprise is kept on the imprest system with a sum being
RM300, on a monthly basis. The petty cashier paid cash for the following expenditures
during the month of June 2022.
June 1 Petty cash balance RM80
June 1 Previous months’ expenses reimbursed by the RM220
chief cashier using cheque
June 4 Paid taxi fare for supervisor RM35
June 7 Postal stamp bought RM15
June 9 Taxi fare reimbursed to marketing officer RM40
June 12 Paid for envelopes RM12
June 18 Paid for refreshment RM40
June 20 Paid for fuel RM50
June 23 Paid for courier services RM30
June 24 Car wash RM25
June 26 Paid A4 paper RM13
June 29 Paid stapler bullets RM9

Required:

Prepare the petty cash book with an analysis column for travelling expenses, postage,
stationery, vehicle expenses and miscellaneous expenses.
(8 marks)

B. CBS Trading recorded a net profit of RM28,780 in the statement of profit or loss for the
year ending 31 December 2022. However, its trial balance revealed a difference of
RM1,809 on the credit side for the year ending 31 December 2022. Upon inspection,
the following errors were discovered:

1. The purchase journal has been overstated by RM2,500.

2. On the credit side, a dividend income of RM2,454 has been entered as RM2,545.

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3. Purchase of RM950 from Al-Sadiq Enterprise has been credited to Al-Sadeeq

Enterprise.

4. Rental expense amounting to RM300 has been credited to rental revenue account.

5. A credit sale of RM888 was made to Hanim Trading. However, the transaction was
never recorded.

Required:

a. Prepare the journal entries necessary to correct the above errors. Narration is not
required.
(4 marks)

b. Show the suspense account.

(3 marks)

c. Calculate the corrected net profit.

(3 marks)
(Total: 18 marks)

QUESTION 4

The following is the trial balance of Cerdik Pintar Enterprise for the year ended 31 December
2022:

Cerdik Pintar Enterprise

Trial Balance as at 31 December 2022
Particular Debit (RM) Credit (RM)
Cash 6,000
Bank 78,000
Machineries 90,000
Inventory as at 1 January 2022 7,700
Carriage outwards 4,300
Purchases/ Sales 75,000 255,000
Salaries and wages 42,000
Commission received 3,100
Utilities 6,800
6% Loan from Bank Raya 50,000
Discounts 2,900 1,800
Motor vehicles 78,000
Returns 1,200 1,900
Motor vehicle maintenance 1,450
Capital 138,850
Trade receivable 79,000
Office equipment 10,000

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Accumulated depreciation as at 1 January

2022:
Machineries 18,000
Motor vehicles 15,600
Office equipment 3,000
Trade payable 40,000
Carriage inwards 2,000
Drawings 2,900
7% Fixed deposit 40,000
527,250 527,250

Additional information:

1. Inventory as at 31 December 2022 was valued at RM28,000.

2. Utilities expenses amounted to RM1,000 was paid in advance.

3. The owner of Cerdik Pintar Enterprise made a cash withdrawal amounting RM400 to pay
for her daughter’s tuition fee.

4. A fixed deposit was taken on 1 April 2022. The interest on fixed deposit was still accrued.

5. Depreciation for the year is charged as follows:

Machineries 10% on cost

Motor vehicles 20% on carrying value
Office equipment 15% on cost

6. A loan was taken from Bank Raya on 1 March 2022. The interest on loan was not yet
paid.

7. Commission fee amounting RM500 was received in advance.

Required:

a. Explain TWO (2) causes of depreciation.

(2 marks)

b. Prepare the Statement of Profit or Loss for the year ended 31 December 2022 and the
Statement of Financial Position as at 31 December 2022. (Round up the figures to the
nearest RM)
(20 marks)
(Total: 22 marks)

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QUESTION 5

Aliya Boutique is running a boutique that specializes in selling various types of garments for
Muslimah. The trial balance of Aliya Boutique as at 31 December 2022 is given below:

Debit Credit
RM RM
Purchases and sales 1,016,000 1,860,000
Capital 2,315,200
Cash at bank 385,000
Cash in hand 260,000
Stock (1 January 2022) 325,000
Debtors and creditors 530,000 662,000
Return inwards and return outwards 36,000 70,000
Insurance 34,000
Rental 24,500
Sundry expenses 36,200
Water and electricity 28,500
Wages and salaries 280,000
Office equipment 746,000
Motor vehicle 1,206,000
4,907,200 4,907,200

Inventory as at 31 December 2022 was RM445,000.

Required:

a. Briefly explain TWO (2) importance of financial statement analysis.

(4 marks)

b. Calculate the following ratios:

i. Current ratio
ii. Acid test ratio
iii. Gross profit
iv. Net profit
v. Inventory turnover ratio
(10 marks)
(Total: 14 marks)

QUESTION 6

a. State THREE (3) reasons why businesses use cheque as a mode of payment.
(3 marks)

b. Safiyyah Enterprise has received its monthly bank statement for the month of January
2023 from BIMB Berhad:

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Bank Statement as at 31 January 2023

Particular Debit Credit Balance
RM RM RM
Jan 1 Balance b/d 13,385 (13,385)
6 Cheque no. 987654 11,250 (24,635)
7 Cheque clearance (123825) 12,030 (12,605)
9 Standing order 170 (12,775)
11 Credit transfer 1,211 (11,564)
12 Cheque clearance (109876) 14,500 2,936
16 Cheque clearance (654321) 15,000 17,936
19 Standing order 155 17,781
20 Cheque no. 987655 1,550 16,231
29 Cheque no. 987658 1,770 14,461
31 Bank charges 115 14,346

The following information is taken from the Bank Account of Safiyyah Enterprise for
the month of January 2023:
Bank Account
Particular Debit Credit Balance
RM RM RM
Jan 1 Balance b/d 13,385 (13,385)
3 Shakira (123825) 12,030 (25,415)
6 Humaira (987654) 11,250 (36,665)
7 Hannah Enterprise (109876) 14,500 (16,275)
10 Insurance (987655) 1,550 (30,775)
12 Beta Bhd (987656) 1,950 (29,225)
15 Honey (987657) 1,780 (27,445)
20 Mamabest (456789) 11,300 (16,145)
29 Rental (987658) 1,770 (17,915)

Additional information:

• The book keeper had incorrectly credited a cheque received from Shakira in the
business bank account.
• BIMB Berhad confirmed that cheque no. 654321 does not belong to Safiyyah
Enterprise

Required:

Prepare the bank reconciliation statement as at 31 January 2023.

(10 marks)
(Total: 13 marks)

END OF QUESTION PAPER

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